Who owns the code? Rights of use in German contracts

Under German copyright law the copyright in a program stays with the person who wrote it and cannot be transferred, so a software buyer acquires rights of use (Nutzungsrechte), and the contract decides how far they reach. Where the contract is silent, a court reads it against its purpose, and the one published ruling we could open on commissioned software read it in the buyer's favour for reproduction and distribution while leaving the right to modify open.

This article reports what the statute and that ruling say. It is not legal advice, and a lawyer should confirm any point for a specific contract.

What can a buyer acquire under German law?

Section 7 of the Copyright Act (UrhG) says the author is the person who created the work. Section 29 says copyright itself cannot be transferred, except under a will or between co-heirs, and that granting rights of use under section 31 is allowed. A software buyer therefore cannot "buy the copyright". What it gets is a right of use.

Section 31 describes what such a right can look like. It can be simple or exclusive, and it can be limited by place, time or content. A simple right lets the holder use the work without excluding others. An exclusive right lets the holder use the work to the exclusion of all other persons and grant rights of use to others. The parties can agree that the author keeps the right to use the work.

For programs, section 69c lists the acts that need the rightholder's consent: reproduction, translation and adaptation, distribution, and making the program available online. A contract can grant each of those, restrict it or omit it. Section 69a(4) applies the general rules for literary works to programs unless the software section says otherwise, which is how sections 29 and 31 reach programs (our reading of that rule).

Who holds the rights on the supplier's side?

Section 69b says that where an employee writes a program in the course of their duties or on the employer's instructions, the employer alone may exercise all economic rights, unless agreed otherwise. Article 2(3) of the EU Software Directive 2009/24/EC has the same rule for employees.

Section 69b names employees, and section 69b(2) extends it to "Dienstverhältnisse", a term the text does not define and which we did not research. It does not mention freelancers or subcontractors. Our reading is that it does not reach them, so their rights stay with them until a contract grants them on. That makes the supplier's own contracts with freelancers and subcontractors part of your question. If a link in that chain is missing, the supplier may not have the rights it promises you. Section 69b does not address this, and we found no official guidance on it.

Section 34 adds that a right of use can be passed on only with the author's consent, which the author may not refuse against good faith. An exception covers the sale of a whole business or part of one, where the author may recall the right if continued use by the buyer cannot reasonably be expected.

What if the contract says nothing about the rights?

Section 31(5) covers this. If the types of use are not listed one by one, the purpose both parties had in mind decides which types of use the grant covers. The same applies to whether the right is simple or exclusive and how far it reaches.

One court has applied this to commissioned software, in a ruling we could open in full. In its decision of 29 October 2013 (11 U 47/13), the Higher Regional Court of Frankfurt am Main decided an interim injunction case. A developer had adapted existing shop software for a customer. The customer never signed the framework contract, but the customer had received, activated and paid for the work, more than EUR 2 million for the earliest work phase. The court found that the customer had been granted rights to reproduce and distribute the modules without limits of time or quality, by implication under section 31(5).

The court listed what it looked at: the clearly identifiable purpose of the contract, earlier dealings, industry practice and the size of the fee. It also noted that the developer had no recognisable interest in using or licensing these customer-specific modules itself. Its headnote says that for a commissioned program, unrestricted activation plus full payment first points to an implied unrestricted grant of the agreed rights.

Three limits matter. It was a single regional appeal court, in urgent proceedings, on its own facts, including a large fee and a draft contract that already promised the rights. It did not decide whether the customer also received the right to modify the software, saying the purpose of the contract did not necessarily cover it. And the court held that a user who can lawfully use a copy may still correct errors under section 69d, whatever the answer on modification.

What can a user do without extra rights?

Section 69d(1) says that, absent special contract terms, reproduction and adaptation needed for the intended use, including error correction, do not need the rightholder's consent when done by anyone entitled to use a copy. Section 69g(2) voids contract terms that conflict with section 69d(2), (3), (5) or (7) and with section 69e. Section 69d(1) is not in that list. Our reading is that a contract can therefore narrow it, which is a reason to check what yours says about changes and fixes by third parties.

What about open-source parts in a deliverable?

Open-source components arrive under licences granted by their own authors. Terms differ widely. The MIT licence allows use, copying, modification and distribution, on the condition that its copyright and permission notice stay in all copies. The GNU GPL version 3 requires, when you convey a work based on a GPL program, that you license the entire work under the GPL (section 5), and that object code comes with the corresponding source (section 6). Under the Open Source Initiative's definition an open-source licence must allow modifications and derived works.

So a code base that mixes proprietary and open-source parts has more than one set of terms. Whether a GPL component affects your own code depends on how it is combined with it, and we did not research how German courts judge that. Ask for a list of components with their licences. Our how-we-work page says that open-source parts keep their own licences and that we list them.

What should a contract for software say? (our addition)

This section is our addition. It turns the statute text and the 2013 ruling into questions to put to a lawyer, and it is not a legal opinion.

The first group of questions concerns the grant itself. Section 31 separates exclusive from simple rights, and only an exclusive right shuts out others, so the contract should say which one you get. Section 31(1) allows a right to be limited by territory, by duration or by content, so check which limits the draft sets. Section 69c lists four kinds of act that need consent, and the contract should name the ones you need. The Frankfurt court left adaptation open, so if another firm will maintain the code later, say so in the text.

The second group concerns who can use the rights and when. Section 34 ties transfer to the author's consent, which means that if you may sell the company or use group companies, you should write that in. The Frankfurt court tied the grant to delivery, activation and full payment, so say when rights pass and whether non-payment affects that. Then ask the supplier for confirmation that employees' rights sit with it under section 69b and that freelancers and subcontractors have granted theirs, because a gap in that chain undermines everything promised to you.

The last group covers the code itself. The statutes we read do not say that source code must be delivered, so state whether it is, where it goes and when. For open source, require a list of components with their licences, so that each set of terms is visible from the start.

Our custom software development page says the source goes into your repository from day one, and our how-we-work page describes the rights of use we grant.

What we could not confirm

We could not open the Federal Court of Justice's text of its 2005 "Fash 2000" ruling (I ZR 111/02) or of its 2003 ruling on handing over source code (X ZR 129/01), so we do not rely on either. The Frankfurt court cites the first. We found no published ruling we could open on whether a freelancer's or subcontractor's rights pass to a client without a contract, and no court text on how German courts treat GPL components inside commissioned software.

We could not load EUR-Lex directly. We read the Directive's text as published in the Official Journal through the Publications Office, and did not check later amendments. The Frankfurt ruling's page does not show whether it became final.